The cost of sending a child to private school has quadrupled since 1990, according to the Centre for Economics and Business Research, making it very much a luxury item for most people, including the sorts of middle-class professionals who might once have considered it a birthright.
The financial outlay now amounts to 38% of a typical doctor’s disposable income, up from 17% in 1990, and would constitute as much as 80% of a clergy member’s after-tax income. But there are ways to make this huge financial commitment less painful.
Just as with a pension, it pays to start saving early. Educating your child privately, and then paying university tuition fees on top, can now “easily add up to £250,000 per child”, reckons financial adviser matching service FindAWealthManager.com. So you’ll need an investment strategy to match.
That’s why you need to start early – saving via the stockmarket in the hope of generating higher growth is one thing when the fees are several years away, but once the bills start coming in, you’ll need to have the money available in less volatile assets. So make sure you also take advantage of all the tax breaks available – use your individual savings account (Isa) – between two parents, you can put away more than £30,000 a year.
As Tim Healy of investment manager Quilter Cheviot points out, “if both parents use their full yearly Isa allowance, in eight years a family could have a tax-free investment pot of approximately £300,000”.
Junior Isas also allow for a yearly tax-free allowance of £4,080, but remember that these can’t be accessed until your offspring turns 18, and that they then take control – so don’t rely on it for university fees.
You should also think creatively. You might be able to get a discount for paying a lump sum up front – some private schools accept advance payments for anything from a few terms’ fees to the entire amount due. Also look at scholarships and bursaries – children who excel at a particular subject can often get a small discount with a scholarship, while those whose parents are genuinely squeezed might well qualify for a more generous bursary.
And, of course, consider whether you really need to send your children privately. The best state schools deliver at least as good an education as the private sector – which is one reason why houses in good “catchment areas” tend to sell at premium prices. You just need to make sure that you plan ahead and are prepared to grapple with the occasionally arcane admissions system to make sure you get the school of your choice.